Despite Retail Woes, SKT Makes $79M California Buy
- May 21, 2009
No market has gone unscathed in this severely crippled economic environment, but some areas are feeling less pain than others are, as evidenced by a recent transaction that just closed in Southern California’s Inland Empire region. A 263,700-square-foot segment of the 539,270-square-foot Crossroads Marketplace in Chino Hills, Calif., was just snapped up at a 5.87 percent cap rate by SKT Investments for $79 million, including the assumption of an existing $63 million CMBS loan on the power center. Located in an affluent neighborhood just a stone’s throw from the 71 Freeway, the nine-year-old Crossroads Marketplace is home to such national retailers as Bed Bath & Beyond, Best Buy, CVS Pharmacy, PetSmart, Sport Chalet and Steinmart. The fully leased segment SKT just acquired last changed hands in 2007 for $73.5 million. Real estate services firm CB Richard Ellis Inc.’s National Retail Investment Group-West orchestrated the transaction on behalf of the seller, using its connections to tap into the private foreign investor market. “In general, larger retail assets are not trading in this market, particularly those requiring new financing,” Philip Voorhees, senior vice president with CBRE, told CPN. “If this transaction speaks to larger market trends, the trend would be toward a preference for either ‘core’ assets, which Crossroads Marketplace is, or valued added/opportunistic properties priced according to risk.” Nationally, the retail market continues to suffer. According to a first quarter 2009 report by real estate services firm Colliers International, the average U.S. vacancy rate is 10.17 percent, a notable increase from the fourth quarter 2008 rate of 9.65 percent. With a first quarter vacancy rate of 6 percent, as per reports by CBRE, Chino Hills is doing relatively well, all things considered; the average vacancy rate for the entire Inland Empire region is 9.7 percent. Apparently, investors with money to spend are quite interested in the Chino Hills retail market. In April, the 90,900-square-foot Crossroads Entertainment Center traded for $25.5 million.